RBS Boosted by Sale of Citizens

30 Oct 2015 | Author: | No comments yet »

RBS profits climb as costs fall faster than expected.

Royal Bank of Scotland’s profits climbed to £952m in the third quarter, up from £896m a year earlier, despite sustained restructuring costs hitting the bottom line.

The banking group has also been accused of “abandoning communities” and “creating credit deserts”, with the figures showing 55 per cent of closures where there is only one branch remaining in a particular location are RBS or NatWest. The bank is part way through an expensive plan to cut back its investment banking operations and to re-focus on retail and business customers in the UK. By contrast new provisions for misconduct costs dived from £780m to £129m, and this year are mostly related to mortgage claims in the US, rather than the payment protection insurance compensation that has dogged RBS and its major UK rivals in recent years.

At the same time, RBS strengthened its capital position, chopping another £10bn of risk-weighted assets from its balance sheet and increasing its core capital ratio to 12.7pc, moving the bank closer to a position at which it will be able to pay dividends. “Since 2008 RBS has gone through a very difficult period, and there are still quite a lot of obstacles to be overcome before we’re back to full health, particularly conduct and litigation in the US,” he said. “There is a lot of scope in this bank. Clearly it is the core of a very successful business, and one that can perform a crucial role for the UK economy.” The strong financial results should help the share price, which is particularly important for the Treasury which began selling down its majority stake in RBS in August.

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